Los Angeles International Airport reported a 5.4% increase in passenger levels during the first half of 2011, nearly double what officials had been projecting.
The increased traffic and its resultant impact on revenues bode well for expectations for a new bond issuance between $200 million to $300 million planned for early to mid-2012, said Ryan Yakubik, director of capital development and budget for Los Angeles World Airports, the Los Angeles city enterprise that owns and operates LAX.
“Anytime you have good growth in traffic, it is helpful to the non-aeronautical revenue and boosts our coverage,” Yakubik said. “Certainly the growth has charged ahead at a higher-than-expected level. This certainly helps us exceed our financial forecast.”
While LAWA did not have an official forecast on projected passenger growth, the forecast in a feasibility study placed traffic growth at 1.6%, he said.
Passenger volume at LAX reached 29.9 million passengers during the first six months of the year from 28.3 million during the same period last year. International traffic hit 8.09 million, a 4% increase, while domestic traffic grew to 20.5 million passengers, a 5.9% increase.
International traffic increased despite a decrease in business from Japan following that country’s earthquake, tsunami, and nuclear disaster in March, Gina Marie Lindsey, executive director of LAWA, said in a statement.
“The decline in passengers and cargo trade with Japan, one of LAX’s busiest air service routes, was balanced by the introduction of new foreign air carriers, such as Turkish Airlines and Iberia, as well as new overseas destinations for existing LAX carriers,” she said.
Normal flight schedules to and from Japan resumed a few months ago.
The airport is more than midway through major airport renovations totaling $4.11 billion that were designed to modernize the terminals and make the airport more competitive with other California airports, Yakubik said. Most of the $4.11 billion capital improvement program is being funded by the $3.5 billion of bonds that have already been issued, he said.
“We are undertaking significant investment that will bring the terminals up to modern standards,” he said. “I think we are doing a pretty good job in addressing some of the long-term facility needs.”
The airport’s senior-lien bonds were rated AA by Standard & Poor’s and Fitch Ratings and Aa3 by Moody’s Investors Service.
LAWA officials expect to take the proposal for the expected bond issuance to the board next year. An underwriter has yet to be named.